STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PLOTKIN MANAGEMENT CORPORATION ) d/b/a RENDALE HOTEL, )

)

Petitioner, )

)

vs. ) CASE NO. 79-017

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Michael R.N. McDonnell, Hearing Officer for the Division of Administrative Hearings, at 9:00 a.m., on April 27, 1979, in Room 360, Graham State Office Building, 1351 N.W.

12th Avenue, Miami, Florida. The transcript of proceedings was received by the Division of Administrative Hearings on September 26, 1979.

APPEARANCES

For Petitioner: Elliott Harris, Esquire

Suite 202, Roberts Building

28 West Flagler Street Miami, Florida 33130

For Respondent: Linda Procta, Esquire

Department of Legal Affairs The Capitol, Room LL04 Tallahassee, Florida 32399

This case arises as a result of an assessment made by the Respondent, Department of Revenue (hereafter DOR), against the Petitioner, Plotkin Management Corporation d/b/a Rendale Hotel (hereafter Plotkin), for sales tax, penalty and interest in the amount of $39,466.46. DOR based its assessment on Section 212.03, Florida Statutes, which requires persons engaged in the business of renting transient or seasonal living accommodations to collect a 4% tax on the total rent charged and to remit this tax to DOR. Plotkin has on the other hand alleged that no tax is due on the rentals it receives since they contend their hotel is an exempt facility as defined in Section 212.03(7), Florida Statutes. That subsection exempts from the 4% tax persons who reside in any building intended primarily for lease or rent to persons as their permanent or principal place of residence.

FINDINGS OF FACT

1. Plotkin is the owner and operator of the Rendale Hotel located at 3120 Collins Avenue, Miami Beach, Florida, which has been operated by Plotkin, a family owned corporation, for more than twenty-five years. The apartment/hotel has 98 studio apartments.

2. In the Spring of 1972, after Plotkin corresponded with DOR, it made the determination that it was exempt from the imposition of sales tax on the rentals it charges. Plotkin made the same determination for consecutive years through and including 1978.

   
   

3. Early in September 1978, DOR caused an audit to be made of Plotkin's records and determined that Plotkin was not an exempt facility and that taxes were due for the three years prior to September , 1978, for all rentals to "non- permanent" guests. DOR's auditor utilized only the transcript of guest charges in making his determination. The transcript was compiled from April 1, 1975, a period beyond three years prior to the date of the audit.

   
   

4. A transcript is a compilation generally prepared by the night clerk of all the active folio cards or guest ledge cards for that particular day. When tenants or guests were absent from the apartment hotel for various periods of time, they were not carried on the transcript. At times when a tenant had no charges for a particular day, the tenant was not carried on the transcript.

   
   

5. As of April 1, 1975, Plotkin had 87 units occupied. As of June 30, 1975, it had 55 units occupied. Thirty of those units were occupied continually during that test period in 1975.

   
   

6. As of April 1, 1976, 80 units were occupied and as of June 30, 1976,

   55 units were occupied. Twenty-five units were continuously occupied during that three month test period.

   
   

7. As of April 1, 1977, 95 units were occupied and as of June 30, 1977, 50 units were occupied. During the test period, 29 units were occupied for a continuous period of time.

   
   

   CONCLUSIONS OF LAW

   
   

8. Plotkin has raised three issues it believes to be in dispute in this case. They will be treated in the order presented.

   
   

   Whether or not DOR was authorized as of September, 1978, to examine the books and records of Plotkin as of April 1, 1975, notwithstanding the three year statute of limitations set forth in Rule 12A-1.93, Florida Administrative Code, and Section 95.091, Florida Statutes.

   
   

9. Neither the cited statute nor the cited rule prohibits the inspection of books and records outside the three year period. It is the determination and assessment of the tax that must be accomplished within three years which is exactly what was done in the instant case.

   
   

   Whether or not the field auditor for DOR gave sufficient weight to evidence presented by Plotkin as to tenants who make the Rendale Hotel their principal place of residence.

   
   

10. A resolution of this issue if favorable to Plotkin would not be a basis for the relief they seek. Part of the function of the administrative hearing in this case was to offer Plotkin the opportunity to produce whatever

    evidence it had available to establish its right to an exemption. Accordingly, the issue of whether Plotkin had the opportunity to present all evidence at the initial determination and assessment is rendered moot.

    
    

    Whether or not the Rendale Hotel was an exempt facility pursuant to Rule 12A-1.61, Florida Administrative Code, for the period July 1, 1975, through July 1, 1978.

    
    

11. DOR has established with the evidence a prima facia showing that Plotkin was not an exempt facility during the periods of time in question.

    
    

12. One of the criteria which a facility must meet in order to claim exemption from the subject tax is that 50% or more of its total units must be rented to persons who have resided for three months continuously preceding the redetermination date. Rule 12A-1.61, Florida Administrative Code. In that DOR made a prima facia showing that Plotkin was not an exempt facility because of its failure to meet this criteria, the burden of going forward to establish the exemption then shifts to Plotkin.

    
    

13. However, although it had the opportunity, Plotkin introduced no evidence at the hearing to rebutt DOR's contention, and to establish that it was indeed an exempt facility. Accordingly, the evidence fails to establish that Rendale Apartment/Hotel was an exempt facility for the period July 1, 1975, through July 1, 1978.

    
    

14. Plotkin also contends that Rule 12A-1.61 is so ambiguous that it should not be applied in the instant case. In addition, in a separate proceeding, Plotkin unsuccessfully challenged the validity of the cited rule. (DOAH Case No. 79-038R)

    
    

15. The issue of the Rule's ambiguity controlled by the reasoning in Robert F. Hartley d/b/a TAJ Apartments v. Department of Revenue, DOAH Case No. 77-1154, which decision is adopted in this Order. In the cited case, the Petitioner challenged the right of DOR to tax rental units on a formula which pertained to units rather than tenants because the applicable section of Chapter 212, Florida Statutes, envisioned that permanent residents would be exempt from consideration of the tax, whereas transient guests would not be exempt. Plotkin makes the same objection in the instant case.

    
    

16. The fact that Rule 12A-1.61, Florida Administrative Code, speaks in terms of units and not tenants, is not ambiguous, inconsistent or in violation of Chapter 212, Florida Statutes, because that statutory provision allows DOR to consider things in addition to tenant occupancy in making is determination of an exemption. It is, therefore,

RECOMMENDED that the assessment be upheld.

DONE AND ENTERED this 7th day of November 1979 in Tallahassee, Florida.

MICHAEL R. N. MCDONNELL

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of November 1979.

COPIES FURNISHED:

Elliott Harris, Esquire Suite 202, Roberts Building

28 West Flagler Street Miami, Florida 33130

Linda Procta, Esquire Assistant Attorney General Department of Legal Affairs The Capitol, Room LL04 Tallahassee, Florida 32301

Docket for Case No: 79-000017

Orders for Case No: 79-000017